Nic Carter revisits Operation Choke Point 2.0 after bombshell Silvergate testimony

Venture capitalist Nic Carter has updated his findings on Operation Choke Point 2.0 following testimony from a Silvergate executive that sheds light on U.S. financial regulators’ attempts to increase pressure on banks operating in the crypto sector.

In his headline, Carter corrects his original, widely cited report from 2023, noting that it was not the Federal Deposit Insurance Corporation that issued the message that banks should reduce crypto deposits by 15%.

In fact, it was the San Francisco Fed that issued this order to banks in the region, affecting major cryptocurrency-related banks such as Silvergate, Signature Bank, and Silicon Valley Bank.

In a series of tweets published on September 20, Carter cites an affidavit from Elaine Hetric, former chief administrative officer of Silvergate, a California bank that provides cryptocurrency services. According to Carter, these new revelations contain evidence that pressure from Federal Banking Regulators to restrict crypto transactions led to the bank’s collapse.

According to Carter, Hetric’s statements support his reporting on Operation Choke Point 2.0, a series of initiatives launched by the U.S. federal government to restrict cryptocurrency financial transactions.

An executive from the now-bankrupt Silvergate spoke out for the first time about Biden’s banking regulator’s efforts to deter banks from dealing in cryptocurrencies, he said:

So what’s new now is that Silvergate’s former chief administrative officer, Elaine Hetric, has filed an affidavit as part of Silvergate’s Chapter 11 filings… for the first time, completely and totally confirming what I wrote in my reports. And it’s all on the record…

— nic carter (@nic__carter) September 19, 2024

Carter explains how the public was led to believe that Silvergate went bankrupt due to losses to cryptocurrency depositors and allegations of fraud related to FTX. Yet Silvergate survived the fallout and was cleared of all charges. These new points underscore Carter’s broader thesis that the Democratic Party under Biden is working to retroactively restrict the crypto industry while pushing toward traditional financial institutions like banks.

Carter, on the other hand, says that the collapse of Silvergate was caused by the US government’s efforts to deter banks from dealing in digital assets.

“Silvergate was a boutique crypto bank that served the crypto industry. So after the Fed released this new informal guidance, they went out of business and voluntarily liquidated.”
Nick Carter

Even after Silvergate and SVB went bankrupt, they were unable to sell any of their digital assets, as any crypto-related business would be considered invalid according to the Office of the Comptroller of the Currency. These assets included the cryptocurrency Sentient Coin and Signature Bank’s failed cryptocurrency payment network Signet, as well as other cryptocurrency deposits made at these banks.

Hetric’s testimony is crucial because it is direct, on-the-record, under penalty of perjury, evidence of what we already knew but no one is willing to admit: The Biden administration directly bankrupted Silvergate, and they did not die on their own because . . .

— nic carter (@nic__carter) September 19, 2024

What is Operation Choke Point 2.0?

Operation Bottleneck 2.0 is a term used by U.S. financial regulators to describe a coordinated plan across multiple agencies to deter banks from doing business with crypto companies.

Government agencies such as the Fed, FDIC, and OCC have issued statements highlighting the risks banks face if they deal with cryptocurrencies.

Although not explicitly banned, this led to financial institutions refusing to work with cryptocurrencies. As a result, banks that mostly deal with cryptocurrencies suffered significant losses.

Examples given by Carter include Metropolitan Commercial Bank’s decision to close its cryptocurrency division, Binance’s suspension of US dollar wire transfers to retail customers, and an investigation into Silvergate’s handling of accounts related to cryptocurrency trading firm Alameda Research.

“These banks died not by suicide, they died by murder,” Carter claimed. “This continues to be a huge scandal, and no one has taken responsibility for it.”